Starbucks Case

Starbucks is a worldwide coffee company that produces world-class coffee, pastries and beverages. They are known as one of the most productive global coffee companies. Starbucks began as a small coffee and was founded by Jerry Baldwin, Zev Siegl and Gordon Bowker in Seattle, Washington in 1971. It is now headquartered in Seattle, Washington and incorporated in Olympia, Washington. The company’s fiscal year end date is September 27th. Although Starbucks has its own audit and compliance committee, that puts together their financial statements and reviews all accounting and financial processes pertaining to the financial status of Starbucks Company, KPMG also audits their financial statements.

The story of Starbucks in Australia is a helpful lesson for everyone in business. It is considered a tale of a business that was seeking world domination in its area that somehow walked into a new market deprived of first testing the waters. What went wrong for the business down under has been analyzed in a lot of research by a lot of experts in that area. When Starbucks had come onto the scene of the Australian market in 2000, it was certainly one of the biggest coffee chains that were worldwide, opening up one new store each day anywhere in the world, notes Patterson. Its achievement in the US, which had not up to that time liked a strong society that was coffee-drinking, had provided the brand great sureness to come in other markets counting China(1996) and Japan(1998). The corporation now has some where around 15,000 stores in 44 lands. Nonetheless in mid-2008, Starbucks' organization proclaimed that it would have to start closing 61 of its 84 Australian stores (Clark, G. ,2000). The closings all had taken place quickly in one month. Fatalities were huge, counting 685 jobs and a$143 million. Just 23 Australian stores were left open to operate in major locations. What went so wrong?

When Howard Schultz launched Starbucks, its main targets were the competitors and the customers. Schultz’s brand aimed at gaining dominance in the coffee industry in addition creating a Italian coffee shop feel in the United States (Buchanan & Simmons, 2009). The strategy of Starbucks was based on new products, listening to customers wants and ensure future expansion (Buchanan & Simmons, 2009). In creating convenience for customers, Starbucks created stores almost on top of eachother. They hinged on the idea that, they did not want to lose out on a sale if a line was too long. This action, of placing stores in heavy populated areas, basing need on projected growth of an area caused some decline in sales during economic trouble with the economy. The 2007 recession, failure of subprime mortgages, increased competition from McDonald 's McCafe brand, and Dunkin Doughnuts all led to a decline in sales for Starbucks in the fourth quarter of 2007 (Buchanan & Simmons, 2009). To attempt to regain market share and recover after the

In general the coffeehouse industry in the United States was experiencing an increase in coffee consumption per capita due to the “Starbucks effect”. At this time Starbucks was operating approximately 20,000 stores in the United States and was living a fast expansion strategy worldwide.

Starbucks’ shares have grown more than 1500% over the past decade. Financially, it has been an oak tree in an ever changing economy with customers that have ever changing demands. However, there has been increased concern for the financial viability of the coffee shop a recently announced plan to close down over 600 stores that were said to be underperforming domestically. That means that more than 1,000 jobs will be eliminated. As scary as that is on the local front to top management, the executive staff feels that it is the only way to recover from it’s shocking $108.7M loss for the 2nd quarter this fiscal year.

Starbucks Corporation is one of the world’s largest coffee roaster, marketer, and retailer of coffee. Some people call Starbucks as one the most success stories in the American history. In 1971, three entrepreneurs, Jordan Bowker, Zev Siegel, and Jerry Baldwin came together with $8000 and opened first Starbucks store in Seattle, WA. They were inspired by the style of roasting beans of Alfred Peet, founder of the Peet’s Coffee & Tea. They started the company with a dream of selling high-quality coffee beans and coffee machines. During their first year of operation, Starbucks used to buy the green coffee beans from Peet’s Coffee but later they started buying the coffee from coffee planters.

Back to the mid 2008, starbucks announced that they were closing 75% of its store in Australia (Patterson, Scott & Uncles, 2010). It was a huge and unexpected closure to this big coffee company, lots of media and Australian rated Starbucks as “failure” in Australia. But situation was totally different from Asia market, Starbucks reached their great success in Asia. As the world’s largest coffee company, Starbucks now faces lots of judgment because of the store’s closure in Australia. Taking a lot factors into account, as a loyal customer, I bielieve that despite its failures, Starbucks is a successful company.

Starbucks have played various roles over the last years to become the global contributor that added value to the society. The Company implemented a strategy of expanding its stores. It developed a geographical expansion of a three year strategy that targeted the areas that had favorable demographic profiles with the company's operation infrastructure. Its selection of the targeted region which served as a hub supported the goal of opening more stores. The Company oversaw the expansion process by creating zones that directed development for each region to implant its culture by opening new stores. The store launched grew steadily and more successful and in 1995 there were about 17,000 stores that fully served his customers (McGraw-Hill Companies, 1999).

The key issues facing this firm were its attempts at massive expansion and creating new value innovation. The need to expand could cause the company to become over exposed and risk its ability to change. New players in the field such as McDonalds pose a new potential threat of competition, though it is unclear if they share the same market. What can Starbucks do to compete with the competition? There are alternative actions Starbucks can take to secure its competitive advantage it has upheld for so long. The one item that truly

In all companies, there are many strengths, weaknesses, opportunities, and threats. Starbucks is one of the world’s leading coffeehouse chain. The beginning of Starbucks was in 1971, the first store ever to open in Seattle’s Pike Place Market. Thanks to Howard Schultz the founder of Starbucks the beginning was far from the end. Schultz was bright and new that Starbucks would have a future. In 1987, seventeen stores open in Chicago and Vancouver. 1988, thirty-three stores were open, Starbucks committed to giving their employees full/part time jobs with full health benefits. In 1991, Starbucks first store in an airport, having 116 stores open at the time. 1994, 425 stores opened, first drive-thru was established. In 1995, they began selling the world’s most popular and favorite drink the Frappuccino, with 677 stores opened. 1996, the first store opened outside of North America in Japan and Singapore, having 1,015 stores. In 1998, Starbucks partnership with Magic Johnson, opened stores in underserved neighborhoods, with 1,886 stores. In 2002, the best thing any store can have is Wi-Fi, Starbucks launches free Wi-Fi in stores, over 5,800 stores. In 2006, Starbucks launches the industry’s first paper beverage cup containing post-consumer recycled fiber, with 12,440 stores opened. In 2008, Starbucks adopted a new mission statement, “To inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time.” With 16,680 stores open. In 2011, launch first annual

Q1: Why do you think Starbucks has now elected to expand internationally primarily through local joint ventures to whom it licenses its format, as opposed to using a pure licensing strategy?

The original idea for the Starbucks format came from the 1980´s when the company´s director if marketing, Howard Schultz, came back from a trip to Italy enchanted with the Italian coffeehouse experience, the idea was to sell the company´s own premium roasted coffee and freshly brewed espresso-style coffee beverages, along with a variety of pastries, coffee accessories, teas, and other products in a tastefully designed coffeehouse setting. The focus was to sell a “third place experience”.

According to Starbucks performance in global market during the last a few years, and the current global tough economic situation, it suggests that Starbucks should really focus on how to maintain the current exist stores more sustainable in profitability and environment friendly instead of rapidly increasing growth as to reach 40000 stores target. First, according to the case of “Starbucks-A paragon of Growth and Employee Benefits Faces Storm Clouds “ study, we found Starbucks has closed almost 7100 stores in USA market because of economic clash. It also mentioned that the raising of strong competition of MCD, who provide much cheaper price of coffee. The heavy pricing completion from competitor and slowing economic drives

Starbucks is a strong competitor in the service sector and a leader in the gourmet coffee industry. With a continued growth rate in store openings and maintaining successful profitability of its operations, Starbucks has demonstrated its ability to sustain a reliable and steady growth. Starbucks’ ability to contend with the vulnerability to current financial threats such as economic recession, higher interest rates, and global competition, is constantly proven by its incomparable brand image, its continual product innovations, and its exceptional customer service. This

Starbucks is the one of the fastest growing companies in the US and in the world that started its business in 1971 as a small shop located in Seattle, Washington, by Jerry Baldwin, Gordon Bowker and Zev Siegl. The shop was selling mostly roasted Arabica coffee beans until they sold the company to employee Haward Schlutz in 1987. Since that day, Starbucks is able to stablish its own name and reputation in the market. Starbucks has now become a good place for the customers to relax and enjoy quality time beside home and work.